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Thursday, August 26, 2010

Should a Seller “Consider VA or FHA” financing?

I saw a home for sale in Melbourne Florida where the comments included "Seller may consider VA or FHA financing." There is a general feeling among real estate agents (and thus sellers) that VA and FHA financing is a problem not to be considered.

I think today's attitude toward VA and FHA loans is a carry over from the boom days of the early 2000s!

As Lenn Harley, real estate broker in Virginia and Maryland put it, "It appears that once a bad idea gets around it lives forever. During the boom of 2004-2007, sellers passed on VA and FHA because the homes wouldn't appraise. Those times are long gone and sellers need to look at all contract offers."

It is true that VA and FHA loans potentially offer a few bumps for sellers if the property has some sort of problem. The inspections can be a bit more stringent as well. The reality is that if a property has problems, seller fix them – especially if it is a safety or health issue.

There are some fees and items that a VA or FHA buyer can’t pay but seller's can limit the amounts in the offer/counteroffer. Due to space limitation, I will be posting a follow up article on specific seller charges later.

In today's real estate market I am confident that most sellers will consider VA and FHA buyers - if they want to sell!

As a first step I always encourage buyers to talk with the lender. Get a good faith estimate of your costs as well as the payments. Know in advance the bottom line. It makes shopping for a new house or condo much more enjoyable!